A Tale of Two Cities

Two political movements representing distinct visions of the global economy will hold their annual conventions the last week of January. The World Economic Forum -- an organization of some 1,000 multinational corporations -- will meet in Davos, a picture book ski resort in the Swiss Alps. The forum was organized 30 years ago to provide a discreet hideaway where businessmen-without-borders could socialize and strategize with one another and selected heads of state. Over the years, Davos has become less an exclusive retreat to do business and more a quasi-public conference on how to make the world safe for multinational capital. This year, more than 500 government officials, media pundits, leaders of churches and nongovernmental organizations (NGOs) such as the Red Cross, and "leading thinkers" will share cocktails and ideas with the captains of global capitalism.

Meanwhile, some 7,000 miles away, a much larger group of environmental, labor and other social activists will gather in sunny Porto Alegre, a bustling commercial city in the flat, cattle-raising landscape of southeastern Brazil. The World Social Forum was first organized in 2000 as a counterpoint to the World Economic Forum. Porto Alegre was chosen because it is in the Third World and because the local government -- run by Brazil's Workers' Party, whose leader, known as Lula, has just been elected president -- offered to host it. Two years ago, 4,000 registered delegates showed up, and another 16,000 people came to listen to the discussions. Last year there were 14,000 registrants and 35,000 observers. For this year's conference, organizers had 24,000 registrants by Dec. 1.

Although the party of Porto Alegre has larger conventions, the party of Davos remains in power almost everywhere. Its neoliberal model, which makes freedom to invest the supreme political value, has been for 20 years the agenda of the International Monetary Fund, the World Bank, the World Trade Organization, the U.S. Department of the Treasury and other governing institutions of the global marketplace.

But inside the cozy chalets of Davos, the triumphalism of the past is likely to be muted this year. The world's economy is entering the third year of economic slowdown, and there's no consensus among the multinational elites on how to revive it. Japan remains in the grip of its deflationary spiral, tight-money central bankers are choking Europe's growth and much of the developing world is staggering under unpayable debts. The prospect of war in Iraq and at least a short-term unsettling of global oil prices add to the jitters. Doubts about the Bush administration's competence notwithstanding, Davos looks to the United States for salvation -- hoping that U.S. consumers will continue to defy the laws of economic gravity by spending more than they earn in order to absorb the rest of the world's excess production.

The uneasiness among the Davos constituency reflects more than business-cycle anxiety. Despite the rapid U.S. expansion of the 1990s, the neoliberal model has failed to deliver on its promises to accelerate Third World growth, improve the distribution of income, and usher in an era of freedom and democracy. Indeed, almost half of the world's 50 poorest countries saw a drop in their per capita incomes over the decade.

Misgivings can now be found even at U.S. universities, where thousands of foreign economics and business students have been trained in neoliberal thought. As The Wall Street Journal recently observed, "After the economic and financial distress that has hit Mexico, Asia, Russia, Argentina and Brazil in the past decade, the current generation [of foreign students] is absorbing a sobering new message about globalization and the trade-offs and turmoil that can come with it."

The response at corporate Davos has been to blame the customer, not the product. The theme of this year's conference is that ordinary people are plagued by a lack of trust in the world's companies, governments and other established institutions. A press release warns that unless trust is somehow restored, the world could see "greater system instability and a growing mandate for NGOs and new political parties."

This global distrust of established institutions that brings heartburn to the party of Davos brings hope to the party of Porto Alegre. It is a sign that the world's ordinary people are waking up to the failures of global laissez-faire. Davos looks to George W. Bush; Porto Alegre looks to Lula. The victory of Lula -- an ex-labor leader jailed under the 20-year military dictatorship with which many of the Davos member companies were happy to do business -- is Porto Alegre's answer to the establishment media that dismiss their protest movement as kooky and without clout.

Lula's victory certainly helps make the case for the Porto Alegre theme, "Another World Is Possible." But the vision of that other world is still incomplete. There is no consensus among the many disparate groups that fill the hundreds of workshops and seminars of their convention. The emphasis on self-sufficiency, decentralization and autonomy for indigenous tribes does not necessarily resonate with the majority of the world's impoverished people, who see their problem as lack of access to First World goods and services.

In Latin America, for example, where the neoliberal model is widely discredited, populist leaders remain intimidated by the threat of a capital strike from the world's financial markets. After a year of financial meltdown, Argentina is still on IMF life supports. In Venezuela, populist President Hugo Chavez is being pushed to the wall by a shutdown of the oil industry. Even in Brazil, Lula has had to reassure Wall Street by appointing conservatives to run the central bank and other economic ministries.

Indeed, the shadow of a third model -- China -- falls over both Davos and Porto Alegre. For Davos, China is a multinational corporation's dream: practically infinite sources of cheap, docile labor and a government that will use force to keep it that way. Yet China's amalgam of private greed and state power threatens to create corporate competitors whose market clout even the U.S. oil and military industrial complexes might not be able to match.

The threat to the party of Porto Alegre is that the socially repressive Chinese model -- what has been called Market Leninism -- may turn out to be an attractive alternative for the desperate Third World, resulting in a future of more centralization, more environmental degradation and much less democracy. History's sun may well be setting on Davos, but it has not yet risen on Porto Alegre.

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